Thursday 14 December 2017

Market on standby as new bill met with caution

Investors hold off as Lenihan bids to shore up the banks with national pension reserve

Allied Irish was up 6.2pc at 47c. Photo: Bloomberg News
Allied Irish was up 6.2pc at 47c. Photo: Bloomberg News

Thomas Molloy

IRISH shares were little changed with declines in Bank of Ireland erasing gains in Allied Irish as investors tried to assess the significance of the Government's new bill which gives fresh powers to Finance Minister Brian Lenihan and his successors.

The ISEQ was almost unchanged, closing down 8 points to 2,830.45, erasing earlier advances after the Dail approved the €85bn European Union-led bailout for the country by a majority of 81 to 75.

Allied Irish was up 6.2pc at 47c following news of the bill which changes the existing law to allow for banks to be capitalised by the national pension fund, even if they are not listed on the stock exchange.

Bank of Ireland slid 3.7pc to 39c while Irish Life & Permanent was down 1.3pc at €1.11 as chairwoman Gillian Bowler announced she will step down in the new year.

Tullow, the oil giant, fell 1.7pc to €14.30 as worries continue about access to oil fields in Uganda. The company said yesterday that a large oil field off Ghana had begun production.

Elsewhere in Europe, stocks snapped the longest stretch of gains in six months after Moody's put Spain's debt rating on review for a possible downgrade.

Banco Santander, Spain's largest bank, and Banco Bilbao Vizcaya Argentaria both fell in Madrid. Inditex slid 5.4pc after the world's largest clothing retailer reported a slowing in profit growth. Drugmakers limited declines after Novartis said it will take full control of Alcon, ending an 11-month dispute with minority shareholders.

The Stoxx Europe 600 Index closed down 0.3pc to 276.92 in London, paring an earlier drop of as much as 0.7pc. The benchmark gauge had climbed for the previous seven days as China refrained from raising interest rates and US retail data boosted confidence in the world's largest economy.

"We've just had a huge boulder thrown into the water sending waves of uncertainty through the market," said David Buik, a market strategist at BGC Partners. "Spain is an enormous country, its economy is the size of Greece, Ireland and Portugal times two. We will have a bit of a mark down, but markets will regain their poise again."

Industrial production

Stocks pared losses after reports showed US industrial production increased more than forecast in November while manufacturing in the New York region rebounded more than estimated in December.

National benchmark indexes fell in 11 of the 18 western European markets. France's CAC 40 fell 0.5pc and the UK's FTSE 100 dropped 0.1pc as did Germany's DAX.

H&M fell 2pc after Europe's second-largest clothing retailer reported a 17pc rise in November total sales. While sales at shops open at least a year rose 8pc, SuperGroup, which owns the SuperDry clothing brand, fell the most since its initial public offering in March, losing 14pc as higher costs curbed its profits.

"We see this as a negative turn," London-based Execution Noble Ltd analyst Sanjay Vidyarthi wrote in a report. "We had previously understood that SuperGroup expected to navigate input cost pressures relatively well, as a result of its growing scale and bargaining power with suppliers."

Irish Independent

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